Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Bloomin' Brands, Inc. | d516286d8k.htm |
 |
NEWS |
Exhibit
99.1 | ||
Mark Graff |
||||
Vice President, IR &
Finance |
||||
(813) 830-5311 |
||||
Bloomin’ Brands Announces
2017 Q4 Diluted EPS of $0.17 and
Adjusted Diluted EPS of $0.41
Q4
Comparable Restaurant Sales Growth of 4.7% at Outback With Positive Traffic of 4.3%
Q4 Combined U.S. Comparable Restaurant
Sales Growth of 3.3% With Positive Traffic of 1.8%
Provides 2018 Financial
Outlook
TAMPA, Fla., February 22, 2018 - Bloomin’
Brands, Inc. (Nasdaq: BLMN) today reported results for the fourth quarter 2017 (“Q4 2017”) and fiscal year ended December 31, 2017 (“Fiscal Year 2017”) compared to the fourth quarter 2016
(“Q4 2016”) and fiscal year ended December 25, 2016 (“Fiscal Year 2016”). In 2017, the fourth quarter and fiscal year included an additional operating week (“53rd week”) compared to Fiscal Year 2016.
Highlights for
Q4 2017 include the following:
• |
Comparable restaurant sales were up
4.7% at U.S. Outback Steakhouse with traffic up 4.3%(1); |
• |
Combined U.S. comparable restaurant sales were up 3.3% with traffic up 1.8%(1); |
• |
Comparable restaurant sales were up
4.9% for Outback Steakhouse in Brazil; and |
• |
Opened seven new restaurants, including four in international
markets. |
Highlights for Fiscal Year 2017 include the following:
• |
Comparable restaurant sales were up
1.8% at U.S. Outback Steakhouse with traffic up 0.3%(1); |
• |
Combined U.S. comparable restaurant sales were up 0.5% with traffic down 1.3%(1); |
• |
Comparable restaurant sales were up
6.3% for Outback Steakhouse in Brazil; |
• |
Opened 31 new restaurants, including 23 in international markets;
and |
• |
Repurchased 13.8 million shares of common stock for a total of $273
million. |
____________________________
(1) |
For Q4 2017, comparable restaurant sales compare the 14 weeks from September 25, 2017 through December
31, 2017 to the 14 weeks from September 26, 2016 through January 1, 2017. For Fiscal Year 2017, comparable restaurant sales compare the 53 weeks from December 26, 2016 through December 31, 2017 to the 53 weeks from December 28, 2015 through January
1, 2017. |
Diluted EPS and Adjusted Diluted
EPS
The following table reconciles Diluted earnings (loss) per
share to Adjusted diluted earnings per share for the periods as indicated below.
Q4 |
FISCAL YEAR |
||||||||||||||||||||||
2017 |
2016 |
CHANGE |
2017 |
2016 |
CHANGE | ||||||||||||||||||
Diluted earnings (loss) per share |
$ |
0.17 |
$ |
(0.04 |
) |
$ |
0.21 |
$ |
1.01 |
$ |
0.37 |
$ |
0.64 |
||||||||||
Adjustments
|
0.24 |
0.33 |
(0.09 |
) |
0.35 |
0.88 |
(0.53 |
)
| |||||||||||||||
Adjusted diluted earnings per share |
$
|
0.41 |
$
|
0.29 |
$
|
0.12 |
$
|
1.36 |
$
|
1.25 |
$
|
0.11 |
|||||||||||
___________________
See
Non-GAAP Measures later in this
release.
1
CEO
Comments
“By all measures the fourth quarter was an excellent finish to 2017 for Bloomin’ Brands,” said Liz Smith, CEO. “Outback’s Q4 sales and traffic performance were well ahead of
the industry, and reflect the ongoing impact of our investments in the customer experience. We are pleased with how our brands are performing so far in early 2018, particularly at Outback where momentum
continues.”
Fourth Quarter Financial
Results
(dollars in
millions) |
Q4 2017 |
Q4 2016 |
CHANGE | |||||||
Total
revenues |
$ |
1,087.6 |
$ |
1,004.1 |
8.3 |
% | ||||
U.S. GAAP restaurant-level
operating margin |
16.3 |
% |
15.2 |
% |
1.1 |
% | ||||
Adjusted restaurant-level operating margin
(1) |
16.3 |
% |
15.1 |
% |
1.2 |
% | ||||
U.S. GAAP operating income margin |
2.9 |
% |
(0.4 |
)% |
3.3 |
% | ||||
Adjusted operating income
margin (1) |
5.3 |
% |
5.5 |
% |
(0.2 |
)% | ||||
___________________
(1) |
See Non-GAAP Measures later in this
release. |
• |
The increase in total revenues was primarily due to $80.4 million of revenues from the 53rd week of 2017, higher comparable restaurant sales and an increase in franchise and other revenues, partially offset by
decreases from refranchising internationally and domestically and the net impact of restaurant closures and new restaurant openings. |
• |
The increase in U.S. GAAP operating income margin was primarily due to: (i) the impact of the
53rd week in 2017, (ii) net year-over-year impact of closure
and restructuring initiatives, (iii) the impact of certain cost savings initiatives and (iv) lower advertising expense. These increases were partially offset by increases in incentive compensation expense and higher labor costs.
|
• |
The largest contributor to our decline in Q4 2017 adjusted operating income margin was an increase in
incentive compensation expense driven by improved sales and profit performance. In Q4 2017, we recorded $15.3 million of incentive compensation expense as compared to a $9.0 million reversal of incentive compensation expense in Q4 2016, resulting in
a $24.3 million dollar change in year-over-year incentive compensation
expense. |
Fourth Quarter Comparable Restaurant Sales(1)
FOURTEEN
WEEKS ENDED DECEMBER 31, 2017 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
4.7 |
% | |
Carrabba’s Italian Grill |
1.3 |
% | |
Bonefish
Grill |
0.6 |
% | |
Fleming’s Prime Steakhouse & Wine
Bar |
3.1 |
% | |
Combined
U.S. |
3.3 |
% | |
International |
|||
Outback Steakhouse - Brazil |
4.9 |
% | |
___________________
(1) |
For Q4 2017, comparable restaurant sales compare the 14 weeks from September 25, 2017 through December
31, 2017 to the 14 weeks from September 26, 2016 through January 1,
2017. |
2
Dividend Declaration and Share Repurchases
In February 2018, our Board of Directors declared a quarterly cash dividend of
$0.09 per share to be paid on March 14, 2018 to all stockholders of record as of the close of business on March 5,
2018.
On April 21, 2017, our Board of Directors approved a $250 million share repurchase program. As of February 16, 2018, we had $55 million remaining under this authorization. On February 16, 2018, our Board of Directors canceled the remaining authorization and approved a new $150.0 million authorization. This authorization will expire on August 16, 2019.
Fiscal 2018 Financial Outlook
The
following table presents our expectations for selected fiscal 2018 financial reporting and operating results. Please note the following as it relates to these expectations:
• |
Fiscal Year 2018 adjusted diluted earnings per share growth is expected to be approximately 11% to
16%, excluding the 53rd week that was included in the 2017
financial results. The 53rd week was estimated to have
positively impacted Fiscal Year 2017 adjusted diluted earnings per share by approximately $0.11.
|
• |
We are in the process of finalizing the anticipated financial impact from the adoption of the new
revenue recognition standard. The Fiscal 2018 Financial Outlook currently excludes the impact of this new standard. |
• |
The adoption of the “Tax Cuts and Jobs Act of 2017” is expected to improve our adjusted
effective income tax rate by approximately 8% to 9% relative to Fiscal Year 2017. We intend to reinvest approximately 50% of our tax savings into additional field compensation, enhancements to our health and 401(k) benefits, as well as leadership
development and other training programs for our
employees. |
Financial
Results: |
Current Outlook | |
U.S. GAAP diluted earnings
per share (1) |
$1.28 to $1.35 | |
Adjusted diluted earnings
per share (1) |
$1.38 to
$1.45 | |
U.S. GAAP effective income
tax rate (1) |
9% to
10% | |
Adjusted effective income
tax rate (1) |
11% to
12% | |
Other Selected Financial
Data: |
||
Combined U.S. comparable restaurant sales
(2) |
1% to
2% | |
Commodity
inflation |
3.0% to
3.5% | |
Capital
expenditures |
Approx.
$200M | |
Number of new system-wide
restaurants |
Approx.
20 | |
___________________
(1) |
The primary difference between our U.S. GAAP outlook and our adjusted outlook for both diluted earnings
per share and effective income tax rate is driven by anticipated adjustments in connection with our relocation and store closure initiatives. |
(2) |
Combined U.S. comparable restaurant sales outlook is based on a comparable calendar basis. For 2018,
this will compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017 through December 31, 2017. |
The following table is a reconciliation of our 2018 adjusted diluted
earnings per share outlook. In this table we have removed the impact of the 53rd week from 2017 results to improve
comparability.
Adjusted diluted earnings per
share outlook reconciliation |
2017 |
2018 Outlook | ||
Adjusted diluted earnings
per share |
$1.36 |
$1.38 to
$1.45 | ||
Impact of 53rd week on adjusted diluted earnings per share |
Approx.
(0.11) |
- | ||
Adjusted diluted earnings
per share on a 52 week basis |
$1.25 |
$1.38 to
$1.45 | ||
Year-over-year
growth % |
Approx. 11%
to
16% | |||
3
The following table provides a comparison of the calendar days included in our 2018 calendar as compared to 2017. The dates are provided by quarter and for the full year on both a Fiscal Calendar Basis and
on a Comparable Calendar Basis.
We will report our financial statements for 2018 on a Fiscal Calendar Basis. Due to the 53rd week in Fiscal 2017, our financial statement comparisons will be 1 week different year over year. We expect the largest
impacts from this shift to occur in Q1 2018 as well as Q4 2018.
We will report our comparable restaurant sales on a Comparable Calendar Basis. We believe this will provide the most accurate assessment of our comparable restaurant sales
results.
Fiscal and Comparable Calendar Calculation Dates | |
Fiscal Calendar Basis |
Comparable
Calendar Basis |
Q1 | |
January 1, 2018 - April 1, 2018 |
January 1, 2018 - April
1, 2018 |
vs. |
vs. |
December 26, 2016 - March 26, 2017 |
January 2, 2017 - April
2, 2017 |
Q2 | |
April 2, 2018 - July 1, 2018 |
April 2, 2018 - July 1,
2018 |
vs. |
vs. |
March 27, 2017 - June 25, 2017 |
April 3, 2017 - July 2,
2017 |
Q3 | |
July 2, 2018 - September 30, 2018 |
July 2, 2018 -
September 30, 2018 |
vs. |
vs. |
June 26, 2017 - September 24, 2017 |
July 3, 2017 - October
1, 2017 |
Q4 | |
October 1, 2018 - December 30, 2018 |
October 1, 2018 -
December 30, 2018 |
vs. |
vs. |
September 25, 2017 - December 31, 2017 |
October 2, 2017 -
December 31, 2017 |
Total
Year | |
January 1, 2018 - December 30, 2018 |
January 1, 2018 -
December 30, 2018 |
vs. |
vs. |
December 26, 2016 - December 31, 2017 |
January 2, 2017 -
December 31,
2017 |
4
Conference Call
The Company will
host a conference call today, February 22nd at 9:00 AM ET. The conference call can be accessed live over the telephone by dialing (877) 407-9039 or (201) 689-8470 for international participants. A replay will be available beginning two hours after
the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers. The replay will be available through Thursday, March 1, 2018. The conference ID for the live call and replay is 13675820. The call will also be
webcast live from the Company’s website at http://www.bloominbrands.com under the
Investors section. A replay of this webcast will be available on the Company’s website after the
call.
Non-GAAP
Measures
In addition to the results provided in accordance with U.S. GAAP, this press release and related tables include certain non-GAAP measures, which present operating results on an adjusted basis. These are
supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: (i) Adjusted restaurant-level operating margin, (ii) Adjusted income from operations and the corresponding margin,
(iii) Adjusted net income, (iv) Adjusted diluted earnings per share, (v) Adjusted segment restaurant-level operating margin and (vi) Adjusted segment income from operations and the corresponding
margin.
We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other
companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion of these
adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that
the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive
plans.
These non-GAAP financial measures are not intended to replace U.S. GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We
maintain internal guidelines with respect to the types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and
those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed
by, or changes to, our guidelines will be considered by our disclosure committee. You should refer to the reconciliations of non-GAAP measures in tables four, five and six included later in this release for descriptions of the actual adjustments
made in the current period and the corresponding prior
period.
As previously announced, based on a review of our non-GAAP presentations, we determined that, commencing with our results for the first fiscal quarter of 2017, when presenting non-GAAP measures, we will no
longer adjust for expenses incurred in connection with our remodel program or intangible amortization recorded as a result of the acquisition of our Brazil operations. We recast historical comparable periods to conform to the revised presentation.
In this release, we have also included forward-looking non-GAAP information under the caption “Fiscal
2018 Financial Outlook”. This relates to our current expectations for fiscal year 2018 adjusted diluted EPS and adjusted effective income tax rate. We have also provided information with
respect to our expectations for the corresponding GAAP
measures.
The differences between our disclosed GAAP and non-GAAP expectations are described to the extent practicable under “Fiscal 2018 Financial Outlook”. However, in addition to the general cautionary language regarding all
forward-looking statements included elsewhere in this release, we note that, because the items we adjust for in our non-GAAP measures may vary from period to period without correlation to our core performance, they are by nature more difficult to
predict and estimate, so additional adjustments may occur in the remainder of the fiscal year and they may significantly impact our GAAP results.
5
About Bloomin’ Brands, Inc.
Bloomin’ Brands, Inc. is one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. The Company has four founder-inspired
brands: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. The Company operates approximately 1,500 restaurants in
48 states, Puerto Rico, Guam and 19 countries, some of which are franchise locations. For more information, please visit www.bloominbrands.com.
Forward-Looking
Statements
Certain statements contained herein, including statements under the headings “CEO
Comments” and “Fiscal 2018 Financial Outlook” are not based on historical
fact and are “forward-looking statements” within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as “guidance,” “believes,”
“estimates,” “anticipates,” “expects,” “on track,” “feels,” “forecasts,” “seeks,” “projects,” “intends,” “plans,”
“may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company’s
forward-looking statements. These risks and uncertainties include, but are not limited to: consumer reaction to public health and food safety issues; competition; increases in labor costs; government actions and policies; increases in unemployment
rates and taxes; local, regional, national and international economic conditions; consumer confidence and spending patterns; price and availability of commodities; challenges associated with our expansion, remodeling and relocation plans;
interruption or breach of our systems or loss of consumer or employee information; political, social and legal conditions in international markets and their effects on foreign operations and foreign currency exchange rates; our ability to preserve
the value of and grow our brands; the seasonality of the Company’s business; weather, acts of God and other disasters; changes in patterns of consumer traffic, consumer tastes and dietary habits; the effectiveness of our strategic actions; the
cost and availability of credit; interest rate changes; compliance with debt covenants and the Company’s ability to make debt payments and planned investments; and our ability to continue to pay dividends and repurchase shares of our common
stock. Further information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in its most recent Form 10-K and subsequent filings with the Securities and Exchange Commission.
The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety
by this cautionary statement.
Note: Numerical figures included in this release have been subject to
rounding adjustments.
6
TABLE
ONE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
FOURTEEN WEEKS
ENDED |
THIRTEEN WEEKS
ENDED |
FISCAL
YEAR ENDED | |||||||||||||
(in thousands, except per share
data) |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
1,075,361 |
$ |
996,680 |
$ |
4,168,658 |
$ |
4,226,057 |
|||||||
Franchise and other
revenues |
12,281
|
7,469
|
44,688
|
26,255
|
|||||||||||
Total revenues |
1,087,642 |
1,004,149 |
4,213,346 |
4,252,312 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
332,600 |
310,674 |
1,317,110 |
1,354,853 |
|||||||||||
Labor and other
related |
312,013 |
289,258 |
1,219,593 |
1,211,250 |
|||||||||||
Other restaurant operating |
255,627 |
244,968 |
978,984 |
992,157 |
|||||||||||
Depreciation and
amortization |
49,803 |
48,632 |
192,282 |
193,838 |
|||||||||||
General and administrative |
91,897 |
59,318 |
306,956 |
267,981 |
|||||||||||
Provision for impaired
assets and restaurant closings |
14,076
|
55,444
|
52,329
|
104,627
|
|||||||||||
Total costs and expenses |
1,056,016 |
1,008,294 |
4,067,254 |
4,124,706 |
|||||||||||
Income (loss) from
operations |
31,626 |
(4,145 |
) |
146,092 |
127,606 |
||||||||||
Loss on defeasance, extinguishment and modification of
debt |
(809 |
) |
— |
(1,069 |
) |
(26,998 |
) | ||||||||
Other income (expense),
net |
151 |
(450 |
) |
14,912 |
1,609 |
||||||||||
Interest expense, net |
(12,003 |
) |
(12,332 |
) |
(41,392 |
) |
(45,726 |
) | |||||||
Income (loss) before
provision (benefit) for income taxes |
18,965 |
(16,927 |
) |
118,543 |
56,491 |
||||||||||
Provision (benefit) for income
taxes |
1,705 |
(14,228 |
) |
15,985 |
10,144 |
||||||||||
Net income
(loss) |
17,260 |
(2,699 |
) |
102,558 |
46,347 |
||||||||||
Less: net income attributable to noncontrolling
interests |
893 |
1,584 |
2,315 |
4,599 |
|||||||||||
Net income (loss)
attributable to Bloomin’ Brands |
$
|
16,367 |
$
|
(4,283 |
)
|
$
|
100,243 |
$
|
41,748 |
||||||
Earnings (loss) per
share: |
|||||||||||||||
Basic |
$ |
0.18 |
$ |
(0.04 |
) |
$ |
1.04 |
$ |
0.37 |
||||||
Diluted |
$
|
0.17 |
$
|
(0.04 |
)
|
$
|
1.01 |
$
|
0.37 |
||||||
Weighted average common
shares outstanding: |
|||||||||||||||
Basic |
91,427 |
104,867 |
96,365 |
111,381 |
|||||||||||
Diluted |
94,721
|
104,867
|
99,707
|
114,311
|
|||||||||||
Cash dividends declared
per common share |
$
|
0.08 |
$
|
0.07 |
$
|
0.32 |
$
|
0.28 |
|||||||
7
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
FOURTEEN WEEKS
ENDED |
THIRTEEN WEEKS ENDED |
FISCAL
YEAR ENDED | ||||||||||||
U.S. Segment |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
960,096 |
$ |
895,816 |
$ |
3,718,261 |
$ |
3,777,907 |
|||||||
Franchise and other
revenues |
8,803
|
4,827
|
32,698
|
19,402
|
|||||||||||
Total revenues |
$ |
968,899 |
$ |
900,643 |
$ |
3,750,959 |
$ |
3,797,309 |
|||||||
Restaurant-level
operating margin |
16.2 |
% |
14.5 |
% |
15.1 |
% |
15.4 |
% | |||||||
Income from operations |
$ |
93,107 |
$ |
17,929 |
$ |
297,260 |
$ |
286,683 |
|||||||
Operating income
margin |
9.6 |
% |
2.0 |
% |
7.9 |
% |
7.5 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
115,265 |
$ |
100,864 |
$ |
450,397 |
$ |
448,150 |
|||||||
Franchise and other
revenues |
3,478
|
2,642
|
11,990
|
6,853
|
|||||||||||
Total revenues |
$ |
118,743 |
$ |
103,506 |
$ |
462,387 |
$ |
455,003 |
|||||||
Restaurant-level
operating margin |
20.5 |
% |
21.6 |
% |
20.6 |
% |
18.8 |
% | |||||||
Income (loss) from operations |
$ |
1,993 |
$ |
8,993 |
$ |
28,916 |
$ |
(5,954 |
) | ||||||
Operating income (loss)
margin |
1.7 |
% |
8.7 |
% |
6.3 |
% |
(1.3 |
)% | |||||||
Reconciliation of Segment Income
(Loss) from Operations to Consolidated Income from (Loss) Operations |
|||||||||||||||
Segment income (loss) from
operations |
|||||||||||||||
U.S. |
$ |
93,107 |
$ |
17,929 |
$ |
297,260 |
$ |
286,683 |
|||||||
International
|
1,993
|
8,993
|
28,916
|
(5,954
|
)
| ||||||||||
Total segment income from
operations |
95,100 |
26,922 |
326,176 |
280,729 |
|||||||||||
Unallocated corporate
operating expense |
(63,474
|
)
|
(31,067
|
)
|
(180,084
|
)
|
(153,123
|
)
| |||||||
Total income (loss) from
operations |
$ |
31,626 |
$ |
(4,145 |
) |
$ |
146,092 |
$ |
127,606 |
||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||
Cash and cash equivalents
(1) |
$ |
128,263 |
$ |
127,176 |
|||
Net working capital (deficit) (2) |
$ |
(500,654 |
) |
$ |
(432,889 |
) | |
Total
assets |
$ |
2,572,907 |
$ |
2,642,279 |
|||
Total debt, net |
$ |
1,118,104 |
$ |
1,089,485 |
|||
Total stockholders’
equity (3) |
$ |
49,471 |
$ |
195,353 |
|||
Common stock outstanding (3) |
91,913 |
103,922 |
|||||
_________________
(1) |
Excludes restricted cash. |
(2) |
The Company has, and in the future may continue to have, negative working capital balances (as is common
for many restaurant companies). The Company operates successfully with negative working capital because cash collected on Restaurant sales is typically received before payment is due on its current liabilities, and its inventory turnover rates
require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and to make capital expenditures. |
(3) |
During the fiscal year
ended December 31, 2017, we repurchased 13.8 million shares of our
outstanding common
stock. |
8
TABLE
FOUR | ||||||||||||||
BLOOMIN’
BRANDS, INC. | ||||||||||||||
RESTAURANT-LEVEL
OPERATING MARGIN NON-GAAP RECONCILIATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
FOURTEEN WEEKS ENDED |
THIRTEEN
WEEKS ENDED |
(UNFAVORABLE)
FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
DECEMBER 31,
2017 |
DECEMBER 25,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED |
U.S. GAAP |
ADJUSTED (1) |
QUARTER TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
30.9 |
% |
30.9 |
% |
31.2 |
% |
31.2 |
% |
0.3 |
% | ||||
Labor and other related |
29.0 |
% |
29.0 |
% |
29.0 |
% |
29.0 |
% |
— |
% | ||||
Other restaurant
operating |
23.8 |
% |
23.8 |
% |
24.6 |
% |
24.7 |
% |
0.9 |
% | ||||
Restaurant-level operating
margin (2) |
16.3 |
% |
16.3 |
% |
15.2 |
% |
15.1 |
% |
1.2 |
% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
16.2 |
% |
16.2 |
% |
14.5 |
% |
14.4 |
% |
1.8 |
% | ||||
Restaurant-level operating
margin - International (2) |
20.5 |
% |
20.5 |
% |
21.6 |
% |
21.5 |
% |
(1.0 |
)% | ||||
FISCAL
YEAR ENDED |
FISCAL
YEAR ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
DECEMBER 31,
2017 |
DECEMBER 25,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED (3) |
U.S. GAAP |
ADJUSTED (1) |
YEAR TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.6 |
% |
31.6 |
% |
32.1 |
% |
32.1 |
% |
0.5 |
% | ||||
Labor and other related |
29.3 |
% |
29.3 |
% |
28.7 |
% |
28.7 |
% |
(0.6 |
)% | ||||
Other restaurant
operating |
23.5 |
% |
23.6 |
% |
23.5 |
% |
23.6 |
% |
— |
% | ||||
Restaurant-level operating
margin (2) |
15.7 |
% |
15.5 |
% |
15.8 |
% |
15.7 |
% |
(0.2 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
15.1 |
% |
14.9 |
% |
15.4 |
% |
15.4 |
% |
(0.5 |
)% | ||||
Restaurant-level operating
margin - International (2) |
20.6 |
% |
20.6 |
% |
18.8 |
% |
18.7 |
% |
1.9 |
% | ||||
_________________
(1) |
Includes adjustments for the reversal of $3.2 million and $5.8 million of deferred rent liabilities for
the thirteen weeks and fiscal year ended December 25, 2016, respectively, related to approved closure initiatives, partially offset by $2.3 million in both periods of legal settlement costs related to the Sears matter, recorded in Other restaurant
operating, within the U.S segment. Also includes adjustments for the reversal of $0.1 million of deferred rent liabilities for the thirteen weeks ended December 25, 2016 related to approved closure initiatives, recorded in Other restaurant operating
within the International segment and losses of $0.3 million on the sale of certain properties related to our sale-leaseback initiative for the fiscal year ended December 25, 2016, recorded in Other restaurant operating, within the U.S.
segment. |
(2) |
The following categories of our revenue and operating expenses are not included in restaurant-level
operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period: |
(i) |
Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and
beverage revenue streams, such as rental and sublease income. |
(ii) |
Depreciation and amortization which, although substantially all of which is related to restaurant-level
assets, represent historical sunk costs rather than cash outlays for the restaurants. |
(iii) |
General and administrative expense which includes primarily non-restaurant-level costs associated with
support of the restaurants and other activities at our corporate offices. |
(iv) |
Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant
performance in a period. |
(3) |
Includes adjustments for the write-off of $5.7 million of deferred rent liabilities associated with
approved closure initiatives and our relocation program, recorded in Other restaurant operating, within the U.S. segment. |
9
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME (LOSS) FROM
OPERATIONS, NET INCOME (LOSS) AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
FOURTEEN WEEKS
ENDED |
THIRTEEN WEEKS ENDED |
FISCAL
YEAR ENDED | |||||||||||||
(in thousands, except per share
data) |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||||||||
Income (loss) from
operations |
$ |
31,626 |
$ |
(4,145 |
) |
$ |
146,092 |
$ |
127,606 |
||||||
Operating income (loss)
margin |
2.9 |
% |
(0.4 |
)% |
3.5 |
% |
3.0 |
% | |||||||
Adjustments: |
|||||||||||||||
Severance (1) |
9,991 |
3,591 |
11,006 |
5,463 |
|||||||||||
Asset impairments and
related costs (2) |
8,431 |
1,449 |
18,997 |
44,680 |
|||||||||||
Restaurant relocations and related costs
(3) |
4,438 |
6,924 |
12,539 |
8,971 |
|||||||||||
Restaurant impairments
and closing costs (4) |
2,845 |
44,371 |
23,770 |
45,806 |
|||||||||||
Legal and contingent matters (5) |
553 |
2,340 |
553 |
2,340 |
|||||||||||
Transaction-related
expenses (6) |
— |
397 |
1,447 |
1,910 |
|||||||||||
Total income (loss) from operations
adjustments |
26,258 |
59,072 |
68,312 |
109,170 |
|||||||||||
Adjusted income from
operations |
$
|
57,884 |
$
|
54,927 |
$
|
214,404 |
$
|
236,776 |
|||||||
Adjusted operating income
margin |
5.3 |
% |
5.5 |
% |
5.1 |
% |
5.6 |
% | |||||||
Net income (loss) attributable to Bloomin’
Brands |
$ |
16,367 |
$ |
(4,283 |
) |
$ |
100,243 |
$ |
41,748 |
||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
26,258 |
59,072 |
68,312 |
109,170 |
|||||||||||
Loss on defeasance,
extinguishment and modification of debt (7) |
809 |
— |
1,069 |
26,998 |
|||||||||||
Loss (gain) on disposal of business and other
costs (8) |
— |
452 |
(14,854 |
) |
(1,632 |
) | |||||||||
Total adjustments, before
income taxes |
27,067
|
59,524
|
54,527
|
134,536
|
|||||||||||
Adjustment to provision for income taxes
(9) |
(4,867 |
) |
(23,718 |
) |
(18,885 |
) |
(33,100 |
) | |||||||
Net
adjustments |
22,200
|
35,806
|
35,642
|
101,436
|
|||||||||||
Adjusted net income |
$ |
38,567 |
$ |
31,523 |
$ |
135,885 |
$ |
143,184 |
|||||||
Diluted earnings (loss) per share |
$ |
0.17 |
$ |
(0.04 |
) |
$ |
1.01 |
$ |
0.37 |
||||||
Adjusted diluted earnings
per share |
$ |
0.41
|
$ |
0.29
|
$
|
1.36 |
$ |
1.25
|
|||||||
Basic weighted average
common shares outstanding |
91,427
|
104,867
|
96,365
|
111,381
|
|||||||||||
Diluted weighted average common shares outstanding
(10) |
94,721 |
107,696 |
99,707 |
114,311 |
|||||||||||
_________________
(1) |
Relates to severance expense incurred as a result of: (i) restructuring events in 2017 and 2016 and (ii) the relocation of
our Fleming’s operations center to the corporate home office in 2016. |
(2) |
Represents asset impairment charges and related costs primarily associated with: (i) our China
subsidiary in 2017, (ii) the remeasurement of certain surplus properties currently leased to the owners of our former restaurant concepts in 2017, (iii) our Puerto Rico subsidiary in 2016 and (iv) the decision to sell Outback Steakhouse South Korea
in 2016. |
(3) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(4) |
Represents expenses incurred primarily for approved closure and restructuring
initiatives. |
(5) |
Represents fees and expenses related to certain legal and contingent matters, including the Sears
litigation. |
(6) |
Relates primarily to the following: (i) professional fees related to certain income tax items in which
the associated tax benefit is adjusted in Adjustments to provision for income taxes in 2017, as described in footnote 9 to this table and (ii) costs incurred in connection with our sale-leaseback initiative. |
(7) |
Relates to: (i) the refinancing of our Senior Secured Credit Facility and modification of our Credit
Agreement in 2017 and (ii) amendment of the PRP Mortgage loan and defeasance of the 2012 CMBS loan in 2016. |
(8) |
Primarily relates to: (i) gains on the sale of 55 U.S. Company-owned restaurants in 2017, (ii) expenses
related to certain surplus properties in 2017 and (iii) a gain on the refranchising of Outback Steakhouse South Korea during 2016. |
10
(9) |
Includes the impact of the Tax Cuts and Jobs Act ($1.9 million), other discretionary tax adjustments and
the income tax effect of non-GAAP adjustments. |
(10) |
Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP
diluted (loss) earnings per share for the thirteen weeks ended December 25, 2016. For adjusted diluted earnings per share, the calculation includes dilutive shares of 2,829 for the thirteen weeks ended December 25,
2016. |
Following is a summary of the financial statement line item classification of the net income adjustments:
FOURTEEN WEEKS
ENDED |
THIRTEEN WEEKS
ENDED |
FISCAL
YEAR ENDED | |||||||||||||
(dollars in
thousands) |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||||||||
Other restaurant
operating |
$ |
(214 |
) |
$ |
(1,123 |
) |
$ |
(5,695 |
) |
$ |
(3,206 |
) | |||
Depreciation and amortization |
1,603 |
1,088 |
6,712 |
3,464 |
|||||||||||
General and
administrative |
11,714 |
3,998 |
17,123 |
7,956 |
|||||||||||
Provision for impaired assets and restaurant
closings |
13,155 |
55,109 |
50,172 |
100,956 |
|||||||||||
Loss on defeasance, extinguishment and
modification of debt |
809 |
— |
1,069 |
26,998 |
|||||||||||
Other income (expense), net |
— |
452 |
(14,854 |
) |
(1,632 |
) | |||||||||
Provision for income
taxes |
(4,867
|
)
|
(23,718
|
)
|
(18,885
|
)
|
(33,100
|
)
| |||||||
Net adjustments |
$ |
22,200 |
$ |
35,806 |
$ |
35,642 |
$ |
101,436 |
|||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME
(LOSS) FROM OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
FOURTEEN WEEKS
ENDED |
THIRTEEN WEEKS
ENDED |
FISCAL
YEAR ENDED | ||||||||||||
(dollars in
thousands) |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 |
DECEMBER 31, 2017 |
DECEMBER 25, 2016 | |||||||||||
Income from operations |
$ |
93,107 |
$ |
17,929 |
$ |
297,260 |
$ |
286,683 |
|||||||
Operating income
margin |
9.6 |
% |
2.0 |
% |
7.9 |
% |
7.5 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant relocations and related costs
(1) |
4,438 |
6,924 |
12,539 |
8,971 |
|||||||||||
Restaurant impairments
and closing costs (2) |
2,030 |
43,599 |
21,300 |
45,138 |
|||||||||||
Asset impairments and related costs
(3) |
371 |
252 |
10,937 |
3,459 |
|||||||||||
Legal and contingent
matters (4) |
— |
2,340 |
— |
2,340 |
|||||||||||
Transaction-related expenses (5) |
— |
314 |
347 |
989 |
|||||||||||
Severance
(6) |
— |
— |
— |
1,276 |
|||||||||||
Adjusted income from operations |
$
|
99,946 |
$
|
71,358 |
$
|
342,383 |
$
|
348,856 |
|||||||
Adjusted operating
income margin |
10.3 |
% |
7.9 |
% |
9.1 |
% |
9.2
|
% | |||||||
International
Segment |
|||||||||||||||
(dollars in
thousands) |
|||||||||||||||
Income (loss) from
operations |
$ |
1,993 |
$ |
8,993 |
$ |
28,916 |
$ |
(5,954 |
) | ||||||
Operating income (loss)
margin |
1.7 |
% |
8.7 |
% |
6.3 |
% |
(1.3 |
)% | |||||||
Adjustments: |
|||||||||||||||
Asset impairments and related costs
(7) |
8,060 |
1,198 |
8,060 |
41,221 |
|||||||||||
Severance
(7) |
920 |
— |
1,210 |
— |
|||||||||||
Restaurant impairments and closing costs
(2) |
815 |
771 |
2,470 |
668 |
|||||||||||
Transaction-related
expenses |
— |
— |
— |
161 |
|||||||||||
Adjusted income from operations |
$
|
11,788 |
$
|
10,962 |
$
|
40,656 |
$
|
36,096 |
|||||||
Adjusted operating
income margin |
9.9
|
% |
10.6 |
% |
8.8
|
% |
7.9 |
% | |||||||
_________________
11
(1) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(2) |
Represents expenses incurred primarily for approved closure and restructuring
initiatives. |
(3) |
Represents asset impairment charges and related costs primarily associated with: (i) the remeasurement
of certain surplus properties in 2017 and (ii) our Puerto Rico subsidiary in 2016. |
(4) |
Represents fees and expenses related to certain legal and contingent matters, including the Sears
litigation. |
(5) |
Represents costs incurred in connection with our sale-leaseback
initiative. |
(6) |
Relates primarily to the relocation of our Fleming’s operations center to the corporate home
office. |
(7) |
Represents asset impairment charges, severance and related costs primarily associated with: (i) our
China subsidiary in 2017 and (ii) the decision to sell Outback Steakhouse South Korea in 2016. |
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
SEPTEMBER 24, 2017 |
OPENINGS |
CLOSURES |
DECEMBER 31, 2017 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
584 |
1 |
— |
585 |
|||||||
Franchised |
156 |
— |
(1 |
) |
155 |
||||||
Total |
740
|
1
|
(1
|
)
|
740
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
226 |
— |
(1 |
) |
225 |
||||||
Franchised |
3 |
— |
— |
3 |
|||||||
Total |
229
|
—
|
(1
|
)
|
228
|
||||||
Bonefish Grill |
|||||||||||
Company-owned
|
195 |
— |
(1 |
) |
194 |
||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
202
|
—
|
(1
|
)
|
201
|
||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
68
|
1
|
—
|
69
|
|||||||
Express |
|||||||||||
Company-owned
|
1
|
1
|
—
|
2
|
|||||||
U.S. Total |
1,240
|
3
|
(3
|
)
|
1,240
|
||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback
Steakhouse—Brazil (1) |
87 |
— |
— |
87 |
|||||||
Other |
36 |
3 |
(2 |
) |
37 |
||||||
Franchised |
|||||||||||
Outback Steakhouse - South Korea |
74 |
1 |
(3 |
) |
72 |
||||||
Other |
54 |
— |
(1 |
) |
53 |
||||||
International Total |
251
|
4
|
(6
|
)
|
249
|
||||||
System-wide
total |
1,491
|
7
|
(9
|
)
|
1,489
|
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of August 31, 2017 and November 30, 2017 to correspond
with the balance sheet dates of this
subsidiary. |
12
TABLE
EIGHT | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARABLE
RESTAURANT SALES INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Q4 |
FISCAL
YEAR | ||||||||||
2017 (1) |
2016 |
2017 (1) |
2016 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more) (2): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
4.7 |
% |
(4.8 |
)% |
1.8 |
% |
(2.3 |
)% | |||
Carrabba’s Italian
Grill |
1.3 |
% |
(2.3 |
)% |
(1.2 |
)% |
(2.7 |
)% | |||
Bonefish Grill |
0.6 |
% |
(1.9 |
)% |
(1.7 |
)% |
(0.5 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
3.1 |
% |
0.2 |
% |
(0.4 |
)% |
(0.2 |
)% | |||
Combined U.S. |
3.3 |
% |
(3.5 |
)% |
0.5 |
% |
(1.9 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (3) |
4.9 |
% |
6.1 |
% |
6.3 |
% |
6.7 |
% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
4.3 |
% |
(7.7 |
)% |
0.3 |
% |
(5.7 |
)% | |||
Carrabba’s Italian
Grill |
(3.3 |
)% |
(3.8 |
)% |
(4.2 |
)% |
(2.7 |
)% | |||
Bonefish Grill |
(0.7 |
)% |
(5.2 |
)% |
(2.8 |
)% |
(3.7 |
)% | |||
Fleming’s Prime Steakhouse &
Wine Bar |
(2.5 |
)% |
(2.9 |
)% |
(5.5 |
)% |
(2.2 |
)% | |||
Combined U.S. |
1.8 |
% |
(6.4 |
)% |
(1.3 |
)% |
(4.7 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
(0.4 |
)% |
0.4 |
% |
(0.2 |
)% |
0.2 |
% | |||
Average check per person increases
(4): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.4 |
% |
2.9 |
% |
1.5 |
% |
3.4 |
% | |||
Carrabba’s Italian
Grill |
4.6 |
% |
1.5 |
% |
3.0 |
% |
— |
% | |||
Bonefish Grill |
1.3 |
% |
3.3 |
% |
1.1 |
% |
3.2 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
5.6 |
% |
3.1 |
% |
5.1 |
% |
2.0 |
% | |||
Combined U.S. |
1.5 |
% |
2.9 |
% |
1.8 |
% |
2.8 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
5.0 |
% |
5.7 |
% |
6.3 |
% |
6.5 |
% | |||
____________________
(1) |
Q4 2017 and Fiscal Year 2017 comparable restaurant sales are reported on a 14-week and 53-week basis,
respectively. |
(2) |
Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates. Relocated
international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening. |
(3) |
Includes trading day impact from calendar period reporting. |
(4) |
Average check per person increases include the impact of menu pricing changes, product mix and
discounts. |
SOURCE:
Bloomin’ Brands, Inc.
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